UAW's Grim Fix

It's got to be a grim time at Solidarity House, proud headquarters of the United Auto Workers union. The union once had a monopoly on automotive labor in America.

John McElroy | May 01, 2007

It's got to be a grim time at Solidarity House, proud headquarters of the United Auto Workers union. The union once had a monopoly on automotive labor in America. Now it is going through a staggering drop in membership. Nearly 100,000 jobs have been eliminated in just the last year.

That's on top of a quarter-century slide in membership, down to nearly a third of what it used to be. And now here comes Washington, all in a fever pitch about cutting carbon dioxide emissions, talking about a 30% reduction by 2016. For the union, that could be the worst of all.

The ambitious targets of politicians, and the tight timeframe in which they expect this to get done, will require massive and immediate retooling for almost all General Motors, Ford and Chrysler plants. What we're talking about is converting their U.S. fleets to essentially match what they have in Europe. And do it in less than a decade.

This, from three financially wobbly auto makers struggling with their UAW legacy costs. GM and Ford have hocked almost everything to get the precious cash they need. Chrysler, if its German parent sells it, will start out as a new company with no cash reserves.

On top of that, circling the auto industry, smelling blood, are the private equity investors. They have all the cash the auto industry needs (where do those guys get all that money?). But this private capital is driving a new discipline in the industry. A cool, patient and utterly ruthless discipline that will only invest where it knows it can get a full return.

This spells trouble for the UAW. Detroit's Big Three can't make money producing compact cars or small pickups in America with UAW costs. And yet, with “greenhouse madness” upon us, Americans are about to be frog-marched into compact vehicles whether they like them or not.

The Big Three will not get new cash to invest in products and plants that don't make good returns. That means they will have to import those cars, which means the UAW will lose even more members.

Of course, the union could compromise and agree to cut costs. But this new financial discipline in the industry will require much bigger concessions than the union will ever accept. No more pensions. No more retiree health care. No more Jobs Bank. Much bigger co-pays. Drastic reductions in work rules and job classifications. And much lower wages for new hires.

In other words, they'd have to match the non-union wages and benefits of the transplants in the U.S. But if the UAW agrees to that, what's the point of having a union?

And so it's stuck. Dead if it sits still, damned if it moves forward.

John McElroy is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit, and Speed Channel.